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Jun 01, 2006—It's the mantra of every clothing and shoe store: have what the customers want, when they want it and where they can buy it.

At two Levi Strauss & Co. stores in Mexico, RFID is helping the clothing retailer realize that goal. Each pair of jeans and every top and jacket is fitted with an RFID transponder embedded in a hangtag along with the bar code and human-readable sales price. Using an interrogator mounted on an inventory pushcart, sales clerks can complete a storewide inventory in about an hour, a process that used to take two days. That inventory data is used on the sales floor to replenish sizes, colors and styles of clothing. During checkout, a scan of the RFID tag, not the bar code, automatically generates an invoice and gathers real-time point-of-sale data so the company knows immediately what products are selling. The RFID tag is removed before the garments leave the store, to alleviate any concerns consumers may have about RFID being used to invade their privacy.

Levi says the in-store use of item-level RFID on clothing in Mexico City, which started in 2005, has increased sales. While Levi isn't yet releasing detailed sales figures, the pilot has been so successful that company officials are considering expanding their RFID efforts. Levi Strauss spokesman Jeffrey Beckman said the company is providing RFID-tagged men's jeans to one retail client for use in a pilot in one U.S. store that seeks to replicate the in-store inventory management success Levi has experienced in Mexico.

"We have highly assorted merchandise," says Derek Kaufman, Levi's IP enterprise architect. Levi jeans come in different styles, colors and sizes, as well as different waist measurements and lengths. "When you can inventory at that level of granularity," Kaufman says, "that's where the case gets strong for RFID."

Unlike the consumer packaged goods industry, which has been focused on using RFID to track pallets and cases of goods through the supply chain, the apparel and footwear industry believes that it will realize more benefits from tagging at the item level. Apparel retailers need to manage a larger number of stock-keeping units, and the price of individual garments is far greater than for, say, a roll of toilet paper.

Item-level tagging also could help retailers make sure that new clothing and shoes are on the sales floor and generate point-of-sale data so items that are selling quickly can be replenished from the back room or distribution center.

With fashion, timing is everything. "Spring or summer goods have only a certain selling season to them," says Stephen Bogart, RFID strategist at Kurt Salmon Associates, a management consulting firm. Garments have a short shelf life, a period from 20 to 40 days before they see their first markdown. If a carton of seasonal clothing is misplaced in the back room and retailers miss the window for displaying the items, it will impact their profit margin because the goods will have to be marked down by 30 percent or so.

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